Benefits and Compensation Strategies with Alex Frum
This week on Industry Insights with Route Consultant, we sit down with Alex Frum, owner of Alpha Kilo Logistics. Alex shares his approach to recruitment and employee retention through effective benefits and compensation packages. From 401k programs and healthcare to safety incentives and unique perks like personalized swag and holiday steaks, Alex reveals how these strategies have resulted in lower turnover and a loyal workforce. Tune in to learn more about creating a supportive and attractive work environment in the logistics industry.
About Alex Frum
Alex is the owner of Alpha Kilo Logistics, a Transportation Service Provider (TSP) for FedEx Ground with operations in Memphis, TN, Olive Branch, MS and Independence, KY. In addition to his Linehaul activities, he is a co-founder of the Linehaul Summit & Expo and provides consulting services to potential and existing Linehaul Contractors. Prior to becoming a FedEx contractor, Alex spent 15 years on Wall Street managing a fixed income trading desk and serving as a regional branch manager. Alex is a former Army officer and a graduate of the United States Military Academy. He is happily married to his wife of 18 years and has 4 beautiful kids.
-
Josh Gregory: [00:00:00] Welcome to Industry Insights with Route Consultant, your front row seat to the fast moving world of logistics and beyond. Each week we bring you game changing insights, real world strategies and fresh perspectives to fuel smarter investments and build stronger businesses. Join us as we sit down with expert guests to explore emerging trends and pressing topics across a wide range of industries.
This is industry insights. Welcome back to the studio, Alex Frum, uh, to talk through more topics. So, uh, you know, we've talked about, I've been here before at least once, right? Yeah, yeah, exactly. Yeah. So, um. Today, I, I wanna really dive into another part of the, kind of the, the other side of recruiting mm-hmm.
Which is kind of the benefits and the compensation package that you actually put together for those recruits. But really, I think that ties into the, the other side of the coin of recruiting, which is [00:01:00] retention. Yeah. So how all of it works together. But, uh, I think. First, it would be great to just kind of talk through how your journey has gone in terms of what you initially might've offered as benefits to, to where you are today.
So it's kind of funny that you say that. I initially offered benefits to my employees because I needed the benefits myself. Yeah. So I, I'm not in the business to run a charity, so I was always looking for the most tax efficient way for me to take advantage of everything that you can do as a small business owner.
Mm-hmm. Um, so. Um, I learned pretty quickly on that I do actually have to take a salary as a, as an owner. Yeah. And talk to your accountant. Every uh, every accountant has a different opinion about this, but my accountant was pretty emphatic that I needed to take a minimum salary. Mm-hmm. Um, and we eventually settled on me taking a salary that can maximize.
My 401k contributions. Yeah. And so I set up a 4 0 1, uh, 401k program in my company specifically so that I could take advantage of the 401k [00:02:00] contributions, uh, because that's a really tax efficient way to set up a retirement fund.
Alex Frum: Mm-hmm.
Josh Gregory: Uh, now some people might tell you to go do I an IRA instead of a 401k.
You know, there's, there's advantages and disadvantages, um, given that we've had mostly Republican administrations over the last. You know, call it 30 years or 20 years. Mm-hmm. I think it's much, you know, you can probably make a bet that taxes are gonna remain low, and so then it's, it's efficient for you to be doing 4 0 1 ks over IRAs.
Hmm. You know, a 401k is a pre-tax contribution and IRA is a post-tax contribution. So if you do, and then there's a lot of, uh, incentives through the federal government for you to set. A 401k contribution. So if you're 50 like I am, you can contribute up to $30,000 a year pre-tax, and then you can do a match on that.
So I do a match in my company. So my initial 401k program was set up specifically so that I could maximize my 401k contribution. Yeah. And then maximize my company [00:03:00] match. And then I made it available to everybody else in my company, uh, by Extension Healthcare. I needed healthcare for myself and my family.
So I got a healthcare program set up for my company that I could take advantage of, and then I shared it with everybody else.
Alex Frum: Mm-hmm.
Josh Gregory: Um, I don't do an HSA, but I do offer, um, life insurance. I offer, um. Dental and vision, because, you know, my eyes, I'm only, I'm getting older. I'm almost, I'm 50 now. And so my eyesight started getting bad.
Yeah. So I needed to get glasses for myself. So I got an insurance program for, for eyeglasses. Um, I like to have nice teeth. Um, I do have, uh, you know, I wanna make sure that I can pay for my, you know, my cavities and everything like that. Yeah. So I got a dental insurance program. So everything I offer to my employees, I did it so that I could take advantage of it as well.
And so the programs that I, and I think that's the biggest thing, like. I participate in whatever programs my employees do, and so if it's not good enough for me, then it's definitely not good enough for my [00:04:00] employees. But if it is good enough for me, then I know and I can have confidence and tell my employees that, Hey, I'm on the same exact program as you are, and it's.
Um, it's good enough for you. And then there's all the ancillary things. So coming out of the pandemic, I took a survey of my employees, asked 'em about their benefits. A lot of them came back and said, Hey, we want short-term disability. Mm-hmm. I had never offered short-term disability before, but I reached out to my insurance broker and said, Hey, you know, walk me through short-term disability.
How much is it gonna cost? How does it work? And it was a program that was, was relatively inexpensive. Mm-hmm. Um, and it's something that can offer. So these are all. So my pay, um, per driver, per mile is probably on the low end in each of my terminals. Mm-hmm. I'm definitely nowhere near the top end. I'm, you know, probably, I would say middle to below.
Mm-hmm. But I offer really good benefits. All my drivers get health insurance after 60 days. Um, I have a 401k program with a company match offer life insurance, short-term disability, um, dental [00:05:00] vision. Um, and so these things I all offer, and then what I have found is once my employees take advantage of this kind of stuff and sign up for it mm-hmm.
They, it becomes very sticky. They don't want to leave, especially, um, you know, once they hook, get hooked into medical care and they understand that, like the advantages of medical care and, and that's the other thing I try to do. I try to educate my employees that you want to set your children up for success then.
Building generational wealth is done through not having unexpected medical bills. Yeah. Like the biggest and fastest way to go bankrupt is to not have health insurance. So I highly, I, I mean, I try to educate all my employees that health insurance is the way you make sure that you don't have unexpected medical bills that can drive you into bankruptcy.
Yeah. Um, and it also gets your drivers away from going to the emergency room for care. Which, you know, you and I would be like, oh, why would you ever go to the [00:06:00] emergency room for care? I mean, you have to wait for six or seven hours to get seen. Right. That's terrible. But it's also the most expensive way to get care.
Mm-hmm. So if you have a re, if you have a doctor, and if you're on a medical plan or health insurance, then you have a, a primary physician that you go see who can refer you to secondary physicians or specialists. That's how you minimize your medical care. Hmm. And that's how you, you know, only pay a copay for get to get seen.
And that means that you keep more of your money for yourself. Like the average e emergency room visit is $3,000. Okay? You go in for a cold. You're getting charged $3,000, whereas you, if you go in for a cold at, with your primary physician mm-hmm. It might be 50 or 80 bucks at most. Yeah. Yeah. So, yeah, I, I, we've talked about this a lot.
I think your benefit plan is, uh, you know, one of your biggest. You know, means of success in terms of keeping these employees. When you, you, you've talked about how your pay compares. How do you find that, those [00:07:00] benefits that you offer compared to the average contractor, like what do we see on average in line haul?
Yeah, so I mean, on average a lot of guys don't pay, don't offer healthcare. Yeah. Oh, really? Even still in line haul. Yeah. Wow. Um, you know, because, you know, you, you, you still don't have a lot of truck drivers who are educated enough to understand that, hey, you know. I'm offering you all these benefits.
Mm-hmm. And they add up. So my gross payroll expense, you know, if I add in my, my compensation, everything like that, it's probably the same as any other contractor. But if I just, if I don't offer those benefits, then all I become is, you know, some chump who's offering a a penny more than everybody else.
Mm-hmm. And you get beat by the next person offering a penny more. Yeah. And you get guys who just jump from ship to ship. You don't get any consistency. Mm-hmm. Okay, so when a guy offers, say, say, I'm offering 60 cents per mile, and somebody's offering 75 cents per mile, they're offering 75 cents per mile because they don't have the benefits.
Um. And so that driver then is expected to go [00:08:00] out and find his own mm-hmm. Healthcare either through the a, CA or through some other third party vendor. And he's probably spending more, you know, yeah. After tax on his healthcare than he would be on pre-tax through, you know, you. Uh, and then there's, on top of that, there's just like the other things you can do for your employees.
So like, I'm wearing an alpha, kilo, you know, shirt right now. Mm-hmm. All my managers have alpha kilo shirts I wore, you know, in my other session you've seen the one with the gold sides. These are my solid blacks. Um, all my drivers, I do jackets every year. Mm-hmm. They say alpha kilo on 'em. One, it's, it's branding, it's free marketing for me.
Yeah. You know, my guys are in the yard or they're at a truck stop and they're walking around with alpha kilo logistics. You know, the number of times I get phone calls from drivers, either current FedEx or non FedEx, you know, who say, Hey, you know, who is that guy who's Alpha kilo? Yeah. Um, is. Exponential because of that.
So I do t-shirts, I do hoodies, I do sweatshirts, I do jackets. Mm-hmm. Um, [00:09:00] I do steaks, which is my, my drivers love. So every year after peak I buy them $70. I buy each of my drivers $70 worth of steaks, which, if you're buying $70 worth of steaks, not from a restaurant, like an actual $70 steak that you get from, you know, just, uh, any kind of place like that.
Those are nice steaks. Yeah. They're really, they're really, really good steaks. Yeah. It's usually. Um, I mean, it's usually like, you know, some years it's been like five or six, you know, New York strip steaks mm-hmm. Or, uh, sirloins or, um, this year I think I did prime rib and um, T-Bones.
Alex Frum: Mm-hmm.
Josh Gregory: So, I mean. I can't tell you the number of pictures I get from my drivers after they get the steaks Yeah.
Of them, you know, thanking me for the steaks and you know, how they've cooked them up. And I love seeing the recipes. I mean, I have some great chefs, you know? Yeah. Yeah. Not the ones just burning. Yeah. Is is, have you ever had any of those where like you get 'em a $70 steak and I just sent a picture that they burnt it and you know, I, I did have, I did have one guy, um.[00:10:00]
You know, and I probably should have, I, I probably was insensitive. Um, he was either Indian or Pakistani. Mm. And they don't eat meat. Right. Or they don't eat, um, red meat. Beef, sorry. And he's, he asked me if he could get pork or chicken, so I, you know, I did take care of that. Yeah. Um. But I was probably insensitive there and I probably should have been aware that, you know, he didn't eat beef.
I didn't, you know, just didn't cross my mind at the time. Yeah. But if you, if you helped him out after the fact, that's just as important. Yeah. Uh, it's, you know, $70 worth of chicken is a lot of chicken. That's a lot of chicken. Yeah. I mean, he was probably in, you know, he had probably chicken legs to last him for, um.
Um, months. A couple months. Yeah. That's great. Yeah. So it, we, we only, we've kind of touched on it, but compensation, you know, how outside of benefits, how did you think through what you wanted to do from a pay rate structure and do you change that? Is it a scale based on tenure, anything like that? Um, so there's a couple different things.
One, I like doing bigger bonuses. Mm-hmm. And, um. And [00:11:00] lower pay if I can, because your bonuses allow you to incentivize your drivers to a certain behavior.
Alex Frum: Mm-hmm.
Josh Gregory: So prob I probably have larger safety bonuses and retention and holiday bonuses, and retention bonuses than the average norm is to allow me to.
Try to incentivize a certain behavior that I want to have. Um, talk, talk to me a little about what those bonuses actually do. So for example, I have a monthly safety bonus. Mm-hmm. Then I have holiday bonuses on the paid holidays that FedEx acknowledges. Okay. So FedEx acknowledges, uh, Memorial Day, labor Day, the 4th of July, Thanksgiving, Christmas, and New Year's.
Okay. Um, and. Uh, except for Christmas and New Year's, FedEx expects you to work through those holidays. So your drivers are gonna be on the road on Thanksgiving, labor Day, 4th of July, Memorial Day. Um, so I have bonuses structure to incentivize my drivers to be available and to work if I have offerings for them.
Um, my safety bonuses are specifically oriented to [00:12:00] incentivize my drivers to follow the safety rules and procedures of my company. Have, you know, complete their safety training and, um, and adhere to the policies that we have in my company.
Alex Frum: Mm-hmm.
Josh Gregory: So this is how we hook up, this is how we break down. This is how we do a, a door check.
This is how we do a door pull off. This is how we enter the vehicle. This is how we exit the vehicle. This is how we do dollies. This is how we do fifth wheels. Um, like I have some weird ones like. I require all my drivers to use a fifth wheel puller, which is, I'm not, if you're not familiar, it's a, a long metal rod that you stick into the fifth wheel to turn it to lock and to unlock and to release and to, uh, to close the jaws on the fifth wheel.
Um, if you driver tries to reach in and tries to turn it, um, it's been proven that that will increase the likelihood of a dislocated shoulder. Oh, okay. So by using a fifth wheel pull, um, it, you don't have to reach in and put your arm in a, in a difficult composition position, [00:13:00] compromising position, um, and allow, it reduces the likelihood of me getting a workers' comp.
Alex Frum: Mm-hmm.
Josh Gregory: Um. Claim for dislocated shoulder. Yeah. Um, same thing with like, um, uh, like I require my drivers to wear high vis gloves. I provide the gloves to my drivers. Um, the gloves have, uh, reflective material on, on all the fingers so that they can see 'em both in high li in low light and in, you know, daylight.
Alex Frum: Mm-hmm.
Josh Gregory: Um, protects 'em in the, you know, warms their fingers up in the winter. Yeah. Um, but. Gives a little bit of protection when they're doing, uh, hooking up the dolly. The dolly weighs about 300 pounds. Um, so this is a way for me to make sure that they're not going to injure themselves when they're hooking up.
So all these different kind of things all have a purpose.
Alex Frum: Mm-hmm.
Josh Gregory: My drivers might not know about it, but it's, it's a benefit for me. You know, I'm providing, they're like, oh God, you know, I love working for Alpha Kilo. They provide me with gloves.
Alex Frum: Yeah.
Josh Gregory: Well. You know, or they provide me with a fifth [00:14:00] wheel puller.
Yeah. But it's also, um, there's a reason why I'm doing that because I wanna try to reduce my workers' comp claims. I require all my drivers to, um, have non or nons slick shoes or mm-hmm. Um, closed toed shoes with nons slick surfaces so that, um, they enter and exit the vehicle and they're not gonna slip and fall.
Yeah. Um, I also require all my drivers to enter the vehicle facing the cab. Um, and always use three points of contact. So all these different things are to reduce and minimize the risk of them having a workers' comp claim.
Alex Frum: Mm-hmm.
Josh Gregory: Uh, which protects my bottom line at the end of the day for sure. Yeah. And, and you don't think about the potential injuries.
And line haul, because people are mainly sitting behind the wheel. But yeah, it's, it's getting in and outta the vehicle, or are some of the Yeah. Most often that people just make a mistake. Yeah. And then the biggest thing is just being a safe operator. Mm-hmm. So if you follow the procedures, you know, you're not using a cell phone, you're not using a handheld.
Device, you're remaining, uh, you're, you're [00:15:00] limiting the distractions while you're in a cab. You're, you're keeping your following distance. Mm-hmm. You are not speeding, you're using cruise control. Um, so all these different behaviors are for a reason because they limit the potential for a rear end or a side swipe collision, which can reduce, you know, limits and reduces the odds that you have an injury while you're driving.
Yeah. So when you're, uh, you talked about it that you're mainly. Mainly, you know, keep comp the same. Bonuses are bigger. That's kind of your structure. But if you've got a driver that's been with you for five years, do they come to you and say, I want pay increase? And do you give it, like, what are, what are your conversations and talk tracks there?
Um, in general, no. I mean, all my drivers get paid the same base rate. Now they might have a different, uh. Their, their year end bonuses. Mm. Okay. Um, are based off of one, how they've performed during peak, um, and two, their longevity with the company.
Alex Frum: Yeah.
Josh Gregory: Um, so that is the year end or retention bonus that I pay out after peak.
Now, I [00:16:00] don't pay a bonus during peak. I wait until. Peak is finished. And so, uh, peak t typically finishes the first week of January. So they're getting that bonus the following year. Um, for, for accounting purposes, you know, that first year when you make that switch is gonna have an impact on, you know, what your bottom line is from the, you know, 'cause bonuses if you have.
47 employees like I do, and you're paying everybody a thousand bucks, that's gonna have a meaningful impact on what your, you know. Yeah. You know what your year, you know what your revenue is for the month of December. Mm-hmm. Um, so if you move it, you know, it's just be aware that there's accounting gimmick and everything like that, that you have to work through and understand.
Yeah. In your cashflow stream from a, you know. Whether it's, uh, just the economy changing or anything that happens where you may say that the cost of living has increased or decreased, do you ever adjust pay rates or do you just adjust bonuses around things like that? No. So I mean, it depends on the year.
So this past year, um, I didn't do an increase in pay rates. I did an increase in bonuses.
Alex Frum: Mm-hmm.
Josh Gregory: Um. And [00:17:00] that was because I was trying to incentivize a new, we were getting a new KPIs for our ve Yeah. Yeah. And so I wanted to incentivize my drivers to adhere to those KPIs. So I increased the bonuses mm-hmm To match those, to incentivize my drivers to adhere to these new KPIs.
Now this year, I fully expect to do a pay increase, um, increase my base rates. It will be something along, you know, based off of what my contract is. Yeah. Um, and we all, so just so everybody understands, we all have the same, um. Uh, there's, there's multiple components to the, the settlement. You have the VMR, and then you have your mileage plus rate.
In general, the mileage plus rate stays the same for all contractors under the current settlement regime. Now, obviously, FedEx has, in the past six years, changed their settlement regime quite a bit. Mm-hmm. But in the current one, if we keep it standard, your mileage plus rate will stay the same. This is what FedEx views as the, um.
The basic expend or [00:18:00] costs of running your business that are equal across the country. Mm-hmm. Whether it's from, you know, your back office, your admin, your software, anything that is not subject to a cost of living. Um, so they look at that as your mileage plus your, you know, taxes. Um. Base plates, all those kind of things.
And then you have your variable mileage rate, which is, um, and the current regime is not hub or, uh, terminal specific. It's actually zip code specific. So you, if you happen to work in, um, you know, um. You know, zip the zip code for Cincinnati, uh, Ohio. Then you're gonna get paid this VMR if you're getting, if you work in the hub in Chicago, you're gonna get paid this VMR.
And so those VMRs change and, and they actually increase or decrease at different rates. So they're not gonna be equal. So they might say that the cost of living is increased. Mo exponentially in California, and it hasn't increased all that much in Phoenix. So, you know, California might see a 5 cent increase on their contract, whereas Phoenix might see a [00:19:00] 3 cent increase.
Alex Frum: Mm-hmm.
Josh Gregory: Um, so that can cause myself, my company, to have a little bit, uh, a little change in the, in the, uh, the base rates.
Alex Frum: Mm-hmm.
Josh Gregory: Um, and it's kind of, I think it doesn't always capture how expensive it is for truck drivers. So for example. Um, Denver is a very expensive market for truck drivers. It's just hard to source truck drivers in Denver.
Alex Frum: Mm-hmm.
Josh Gregory: And so for a long time, FedEx would look at Denver and say, oh, the cost of living is not that much, but the truck driver acquisition costs were very high. And so it took a long time for FedEx to recognize that. We need to compensate contractors who operate in Denver at the same rate that we they there in Chicago, because it's just such a competitive market.
And so, you know, you have to work with FedEx and engineering to understand what, how competitive your markets are and how challenging it is. Um. In general, I would say California, New York, New Jersey, Chicago are the most [00:20:00] competitive markets. And so that's where the highest VMR rates are. And by extension, you know, Kansas City, um, Memphis Olive Branch.
Um. You know, Greensboro are some of the lower areas because there's just not as much demand for, uh, truck drivers in those areas. Yeah. Okay. So you, you, uh, you have touched on it some, but the, the benefits that you've put together, the compensation that you've put together mm-hmm. How have you found that to affect your ability to retain employees long term?
Uh, I think it's, I mean, I think the benefits that I've come up with. Especially the healthcare. Mm-hmm. And, um, the 401k and my company match, um, are one of the reasons why I have low turnover. Now, don't get me wrong, I have turnover every year. Yeah. I, I'm always replacing the bottom 10% of my company, you know, regardless of.
I can never hire 47 perfect employees. Mm-hmm. Who wanna stay with me forever.
Alex Frum: Yeah.
Josh Gregory: Um, I think we were talking earlier, I mean, I'm right now in the [00:21:00] process of hiring three di three guys. Yeah. Um, I had a team just, uh, just fall apart. One guy decided to move to Charlotte North, uh, Charlotte, North Carolina.
Um, and so his partner didn't wanna be a team, didn't want to have a. He stayed with me and he's gonna be a solo driver for me and the, um, and so I had to go out and hire a new team. Um, and then I had a team just fall apart. Yeah. You know, the driver just, they've been with me for a, a couple years and one of the drivers just stopped showing up to work.
You never know. Might have problems at home. Yeah. I try to stay on top and talk to my drivers and get them to communicate with me because I'm, you know, I care about them.
Alex Frum: Yeah.
Josh Gregory: Um, but not everybody's gonna share or they don't think that I really do care. Um, so he just stopped showing up to work. So, um, next week I'll be fully staffed again.
Um, I had a driver, you know, go work for, I mean, this is actually something that really frustrates me. I had a driver who gave me no notice and left to go for another contractor.
Alex Frum: Mm-hmm.
Josh Gregory: And I think [00:22:00] that is, I, I, I, I have very little respect for contractors who recruit inside the fence. Mm. You know? Yeah. In my mind, you know.
That's just, just poor behavior. Yeah. Um, and I've actually, you know, I've had situations before where, um, I had a contractor who inside the yard who was recruiting my drivers. Yeah. And I got frustrated by it. Yeah. Um, and so I went to, one morning, I drove down to the yard, um, walked into the, the terminal and.
Offered all the drivers a bunch of cash to just sit and not dispatch that day. Oh man. Um, a pissed off FedEx. Yeah. Pissed off that contractor. But I made my point. Yeah. Like, you know what, it's not acceptable for you to keep, you know, poaching my drivers. Yeah. It's not the way, this is a closed system in some ways.
Like we've, we can help each other. Yeah. But if you're gonna just take every driver that I bring in, then, so I mean, it worked out. You know, he got the, he got [00:23:00] the idea. He stopped poaching my drivers and now we have a good relationship. But yeah. Um. That's, that's very good of you. I mean, I think the drivers all appreciate it.
Yeah. Yeah. Um, but I mean, in general, I'm trying to help out other people. Right. So like, I will refer drivers to other contractors. So like, you know, we've talked about it in previous sessions. I'm always recruiting. Mm-hmm. I'm, or I'm always getting referrals as people come to me and say, Hey, I'm looking for work.
I will try to help them find work if I don't have anything, you know? Yeah. I'll call up, you know. Josh Gregory and say, Hey, you know, um, I don't have, I don't have a spot, but you know, this guy reached out to me. Do you need a driver?
Alex Frum: Mm-hmm.
Josh Gregory: Do it all the time.
Alex Frum: Okay.
Josh Gregory: Um, and guys do it to me too, so it's great.
Alex Frum: Yeah.
Josh Gregory: Um, and that's what I think the, the, the market should be like instead of like, oh, you know what, I'm gonna try to poach Josh's. Drivers because then all you're doing is just creating, you know, the situation where we're actually harming our customer. FedEx. Mm-hmm. You know, FedEx doesn't want to see us, you know, turf wars inside the yard.
Yeah. For drivers, [00:24:00] you know, at the end of the day, they want all the tractors dispatching on a daily basis. Yeah. Um, but. I got distracted there. So what, what was the question? Yeah, it's how it always happens. No. Like what's the, when you're thinking you answered it mostly. Yeah. But the, the other side of it is when you're thinking about like how long people have been with you.
Oh. So yeah. Yeah. So I've had drivers, I have drivers now who are going on six years of employment with me. Right. You know? Yeah. Um, I have probably outta my 47 employees, I would say, if you talk to my HR manager, I probably have 40 of 'em or maybe 35. No. 40, um, who've been with me more than a year. Yeah. Um, and that's great because, I mean, the thing we always talk about is.
Uh, recruiting is not cheap. No, no. I mean, at, at a minimum it's $500 per week. Yeah. At a minimum just to post an, to post an ad on Indeed. And to, and what you have to do is you, you have to, uh, like subsidize it. Mm-hmm. [00:25:00] Um, you have to encourage clicks on it. Yeah. What you want your abbot at the top and not at the bottom.
Um, so there's all these marketing gimmicks. You know, if you talk to somebody who's into internet. Advertising they can tell you about, you know, charging for clicks and all that kind of stuff. Yeah, I don't really understand it. Um, but yeah, $500 a week. Um, I would say the typical cost for a driver at a minimum is 6,000 bucks.
Yeah. That's how much it's gonna cost you to, you know, to, uh, recruit a driver. So you post an ad. Then you have to go through all the time that you or your HR manager or your recruiter's wasting to, uh, to go through and filter all those drivers. Mm-hmm. Select more than one. Yeah, because you can't just expect one driver's going to go through the process, but you're usually.
Working in sequence, um, or in parallel bringing a bunch of drivers through First Advantage, spending all that time and manpower to get through first advantage. And it takes seven to 10 business days.
Alex Frum: Mm-hmm.
Josh Gregory: At a minimum to, [00:26:00] to get a driver, to get through all that. So that's more time that you're wasting, and in the meantime, you're not filling that spot in that truck, so you're losing that revenue.
So that's why at a minimum is $6,000 to, to. Replace a driver, then you have to onboard 'em. Yeah. Then you have to train them on your culture, you know? So, um, I mean, I think one year I estimated that I had spent $60,000 to recruit drivers. Yeah. Um, so at a minimum, I mean that, and that was just recruiting costs, let alone all the opportunity costs I lost.
Right. Um, so that's why I, I, I harp on this. Treat your drivers well.
Alex Frum: Mm-hmm.
Josh Gregory: You know, treat them with respect. Speak to them truthfully, and they will reward you with loyalty beca. And that loyalty is worth every penny.
Alex Frum: Mm-hmm.
Josh Gregory: Because losing that driver means that you're out that revenue. Um, and then you're incurring these extra costs.
And it's an extraordinary amount. Now, don't get me wrong. If you have a bad driver, a bad apple, get rid 'em as fast as possible because the last [00:27:00] thing you want is them to create a, a safety issue. Or a culture issue. Yeah, and a safety issue can be a lot of money. The last thing you want is to lose your indemnification with FedEx because they haven't done their safety training.
And then on top of that, they get into an accident and you're being hit with a $75,000 charge. Yeah. So make sure your drivers are safe. Uh, make sure that you have good employees, but if you have a bad apple, get rid of them immediately. But if, as long as your apples are good, you know, even if they sometimes, you know, might be, you know, have a couple brown spots on them Yeah. If you can buff it out and work it, you know, that's an employee that you know who's gonna be very loyal to you. Mm-hmm. Like, I had a driver recently who went through a divorce and he's like, I, I just can't be focused on work. You know, can I take, I don't have any more PTO, can I take a couple weeks off?
I said, sure. You know, your family's more important. Mm-hmm. Get your children situated. Figure out what you're gonna do. And you know, he's been great ever since. Yeah. This was like two or three years ago. The guy doesn't take any [00:28:00] PTO anymore. Like, I mean, I keep on trying to encourage him to take time off.
Yeah. Yeah. I mean, at the end of the day, I buy back his PTO. Yeah. So that's another benefit I offer. I offer, uh, all my drivers PTO paid time off. Mm-hmm. And I structured it as paid time off instead of as vacation. It's just a nuance in the labor laws. Talk to your accountant or your lawyer to understand how your state works and how vacation versus PTO is categorized.
Mm-hmm. Because there are different rules per state by it. So I do PTO, um, and then I buy back any unused PTO. Um, before Peak. Yeah. And so I, which encourages my drivers not to take time off during peak. Yeah, yeah, yeah. And, and really I think that's the right strategy in this space. I mean, I think we talk about it all the time that, and we've talked about it here, where there are people who just try to pay a little bit more.
Yeah. And you, you don't retain the employees. You, you end up spending a lot more, you know, I, I, I think we've talked about people who are paying. Uh, what seems like an impossible amount Yeah. [00:29:00] Of money. Um, but in situations like that, you're just commoditizing your drivers and they're gonna move on to the next person who can offer them a penny more.
Yeah. And so this is a, a strategy that, you know, we employ, that we've seen good contractors like you employ to have the right benefit. PR package. Treat your drivers right. Find all the ways to value them. Things like the, yeah, the stakes and the jackets, where it really feels like you care about them more as a number.
Keep them in the long run, both to create the right culture for your business. 'cause you've got employees that you've taught this culture, they're embodying it and they're staying as opposed to trying to rebuild the culture every single time. You bring in a new driver and that saves you a ton of money.
And keeps your contract healthy as well, like all the things you've talked about. And I think ultimately that's how you structure benefits and compensation in a way that is the most successful. Yeah. And, and this is kind of some of the fun stuff you get to do as a contractor. Um, you know, like recruiting is, I mean, maybe you find recruiting fun.
I don't generally find recruiting fun. Yeah. Um, I do find spreadsheets, you [00:30:00] know, relatively intriguing. Mm-hmm. You know, intellectually, um, interesting. And so I find that, I guess, you know, intellectually fun or stimulating. Mm-hmm. Um, but with the fun part is, you know, what? You know, we got, I'm gonna do wa I'm gonna do water bottles this year.
Let me design a water bottle. Yeah. Or I'm gonna do baseball caps, lemme design a baseball cap. You know, that's the fun stuff.
Alex Frum: Mm-hmm.
Josh Gregory: Mean over my six years, or you know, six and a half years of being a contractor, I've done, you know, like you said, jackets, hoodies. Sweatshirts. Uh, t-shirts, collar shirts.
Backpacks. Um, I did sunglasses one, you know? Yeah. You know, there's like this sky. Do they have the logo on 'em or Nice. Yeah, the sky's the limit on, I mean, I mean, I'm sure that you have somebody here at Rock Consultants who really enjoys coming up with swag. It's definitely true. Yeah. It's a lot of fun.
Yeah. Um. And there's so many out, there's so many websites to mm-hmm. Uh, uh, to source this stuff. I mean, uh, one, I mean one of the things my drivers love is we do safety vests mm-hmm. That are emblazoned with alpha kilo. Nice. Yeah. [00:31:00] So, you know, you are required to wear a safety vest when you're on a FedEx facility.
So all my trucks come equipped with two safety vests. Even if they're a day cab, they each have two safety vests. Mm-hmm. So, um, so my driver's walking around the yard. You know, are always, they're always saying alpha kilo. Yeah. You know, in the summer, in the winter, you know, if they've gotta wear a safety vest, at least make it a cool one.
Right? Yeah, exactly. Perfect. Alright, well Alex, I, I really appreciate you walking through kind of your strategy here and how you've built this benefits and compensation program for your team and, and sharing how it can help everybody else. Yeah, it was my pleasure. I mean, it's one of the, I mean, remember you're, you wanna make sure that it's benefits that you want to participate yourself in.
Mm-hmm. And then make it fun. Yeah. Yeah, why not? Yeah, exactly. Perfect. All right. Thanks Alex. Thanks.
